Buying a home is a lifelong dream for many Canadians. A home is also the single most significant financial purchase you will ever make, and it has a large effect on your lifestyle going forward as well. Therefore the decision to buy a home requires a lot of thought and planning. To help you make an informed decision about buying a home, we have broken down the process into five distinct steps.
Step 1: I Want to Be a Homeowner
Before you proceed further, you need to decide if homeownership is right for you, versus remaining a renter. There is no right or wrong decision – it is based only on your personal financial picture and lifestyle preferences. Are you financially ready? Do you understand the maintenance requirements that come with homeownership? Weigh the pros and cons of buying a home in Ottawa. There is no shame in discovering that you will need to put the dream on pause for a year or five until your finances are more stable. If your mind and heart say that it’s time, move on to step two.
Step 2: I’m Prepared Financially
If you want to buy a home, there are two major financial considerations. One, you must have a down payment (at least 5% of the purchase price with mortgage insurance, 20% of the purchase price with a conventional mortgage). Next, you must have an understanding of your monthly budget to calculate how much home you can afford. Calculate your monthly debt payments (student loans, car loans, credit cards etc.), monthly expenses (gas, food, utilities etc.) Speak with a mortgage broker to help you calculate your expenses and pre-approve you for the right mortgage solution that makes the most sense for your financial picture. You can also use our online mortgage calculator to get a better understanding.
Step 3: I Know What Kind of Home I Want
Once you know how much home you can afford, it’s time to start house hunting. What neighbourhood appeals to you or makes the most sense for your lifestyle (commute, schools, amenities etc.)? Do you prefer new build or heritage? How many bedrooms/bathrooms do you need? Do you have children or plan to in the near future? There is a clever rule of thumb when it comes to buying a home: price, size, location – choose two. You can have a huge house at a great price, but it might be outside of town. Or you can have a home in an amazing location with a perfect price, but it will be small.
Step 4: I’ve Found the Right Home & Made an Offer
Work with a real estate agent to find a list of homes that match your needs. Schedule a viewing, ask lots of questions. Try not to be wooed or dissuaded by surface features – you can change paint colour! Focus on the bones of the home. When you find the right home, it’s time to make an offer and negotiate through your agent until you and the seller agree on a price (or agree to move on). Once your offer is accepted, visit your mortgage broker and get the financials arranged. If you received mortgage pre-approval, this will be an even easier process.
Step 5: I’m a Homeowner
Congratulations! You’ve got the keys and now the home is yours. As the years pass, you can look into the option of mortgage refinancing or obtaining a Home Equity Line of Credit (HELOC) to pay for renovations, fund your child’s education, or any other reason.